EU vows to act quickly on Panama Papers

The EU has "a duty" to stop the kind of tax avoidance uncovered in the Panama Papers scandal, the European commissioner for taxation, Pierre Moscovici, said Wednesday.

Moscovici told reporters the use of offshore companies to hide what he called "shocking amounts" of financial assets from tax authorities was "unethical." He estimated that the tax shelters resulted in an annual loss of some €1 trillion in public finances.

The Panama Papers leak resulted in a worldwide investigation by more than 100 media outlets revealing that political figures, business leaders and celebrities had used a Panama-based law firm, Mossack Fonseca, to hide assets offshore.

“It is too early to comment on specific cases,” said Moscovici of the information uncovered by the leak. But he added that the Commission has been trying since November 2014 to tighten tax rules across the union and hoped the extent of the Panama Papers revelations would spur countries to action.

Many countries have been reluctant to cede too much authority on taxation to Brussels.

The effort, Moscovici said, had already been given a political boost after another tax-avoidance scandal, Luxleaks, revealed how multinational companies had made sweetheart deals with Luxembourg authorities to avoid paying taxes in countries where they operate.

“Before Luxleaks, a text on taxation was negotiated for seven years," said a top EU official. "Now, it is seven months.”

The EU effort to close loopholes has already made progress, Moscovici said, now that it has adopted an automatic exchanges of tax deals between countries and companies and is working on an automatic system for sharing firms’ tax data between all tax authorities.

Moscovici wants to keep the momentum going against tax evasion in the coming months.

Next week, along with the Financial Services Commissioner Jonathan Hill, he will unveil a proposal that has been long-awaited by tax campaigners and the European Parliament, to push companies operating in the EU to disclose their tax information country-by-country.

However, the most recent draft of the proposal, seen by POLITICO, notes that such reporting requirements would be legally hard to push outside the EU.

The tax commissioner said he also hopes to wrap up with EU countries in the coming months common criteria for determining which countries have been cooperative on tax issues. Moscovici said such a naming-and-shaming list of "uncooperative" countries on tax issues would "open a dialogue" with countries on the list. He also said that the EU could propose linking cooperation on tax questions with trade issues.

Sources said EU economy and finance ministers are likely to discuss how to respond to the Panama Papers information in late April in Amsterdam.

The European Parliament's special committee on tax rulings, created after Luxleaks scandal, is also planning to look into the Panama Papers leaks.

Burkard Balz, an influential German center-right MEP on the special committee, called for Mossack Fonseca and the Panama government to be grilled by EU lawmakers.

"It is intolerable that both law firms and entire countries use living at the expense of other states as a business model,” he said in a statement.